It’s no secret that the housing market has been on a wild ride in recent years. Home prices have hit record highs across the nation, but with surging mortgage rates, it seems that the party may be coming to an end. Many economists are mixed about whether home prices will continue slowing declining through 2023 or crash altogether.
How Can We Predict the Future?
Just like the weather, no one can predict a housing market forecast with 100% certainty. The best we can do is look at the big picture and analyze housing market predictions, current housing market conditions, and historical trends.
To understand the future of housing markets, it’s essential to look at what’s driving current trends. The overall housing supply remains limited due to those who bought houses in the last couple of years at very low mortgage rates and are now staying put. This tight inventory has kept housing prices from declining, making homes unaffordable for many. There still aren’t many homes for buyers to choose from. However, we are seeing an interesting shift on the buyer and seller sides.
Existing home sales have been down in recent months, even with the already-low housing inventory, and sellers are taking their homes off the market. Buyers are starting not to fall for the exorbitant home prices, mainly because everyone’s wallets are tighter with current economic circumstances. It’s also because it becomes harder to get approved for a loan when mortgage rates rise, and you are certainly already aware that we are seeing rising interest rates right now. On the seller side, people are pulling their homes off the market because they’re nervous about the economy.
Interest Rates Are a Common Predictor
An accurate housing market forecast for 2023 will depend largely on the future of mortgage rates. TheMLSonline just published an excellent article recently on where mortgage rates are going if you want to learn more. If we continue to have rising interest rates, we could see a continued wane in demand, as fewer and fewer people will qualify for a loan or even want to get into the housing market. It’s hard to get someone to agree to a 6-7.5% interest rate when they see their friend or family member get 2-3%. If interest rates increase too abruptly and home prices don’t come back down to Earth, it could be too much of a shock for the market and cause a housing market crash.
The way it looks right now, we might be more on the path toward a course correction in the housing market rather than a complete slip into oblivion. Sellers are starting to realize they can’t list their homes at outlandishly high price points, and hopefully, the Fed’s interest rate hikes will correct the ship so that overall prices and rates that make up the price index calm down over time.
What Does the Future Hold?
That being said, the wild card is the current state of the rest of the economy. We haven’t fully recovered from supply chain issues, consumer goods are still very inflated, and the Fed may hike the interest rates again. Also, we just went through midterms, which always throw some wild cards into the mix, regardless of which party comes out on top. The cherry on top is that the railroad workers are on strike, protesting current working conditions, benefits, wages, etc. If that industry comes to a grinding halt (literally), that will impact everyone’s lives and the overall economy daily. So, all of that may throw the course correction off course.
Is It Still Smart To Buy Real Estate?
No matter what happens in 2023, it’s important to remember that real estate remains one of the best long-term investments available. With a little bit of research and due diligence, you can increase your chances of success no matter which direction the market goes. Even if there is a housing market crash, high home prices, or low housing supply, there may still be great opportunities to capitalize on, depending on your individual situation. So don’t give up hope just yet – the future of the real estate market is still uncertain, and it’s not too late to make wise investments.
Those Are Our Housing Market Predictions!
Overall, there is no clear answer as to whether housing markets will crash or not. It is vital to remain vigilant and be prepared for any eventuality. Keeping an eye on mortgage rates, housing supply, home price growth, and other factors that could impact the market can help you make more informed decisions about your investments in the future.
Good luck, and don’t forget to stay up to date with all the latest in the real estate industry by visiting TheMLSonline’s website. New articles get posted all the time, and they’re geared toward anyone and everyone looking to get into, or out of, the real estate market. There’s even a whole webpage filled with articles specifically about housing market updates! Check it out!